On my way to the shopping mall in Brisbane I met this charming individual. My mind flashed forward of where I would be when I retire. Will I too be broke at retirement like so many out there? We all get derailed at some point in life but this must be the worst. At retirement age the possibility of recovering from bankruptcy is slight. There are three main reasons for this. One being that past retirement age people are less likely to employ you even though you may be the best person for the job! Then if you have no money to start with it will be very difficult to start up a business of your own and getting funding from any bank will be almost impossible. Lastly you may not be feeling as energetic as you used to and laborious work may be too difficult.
The key is to find ways to prevent being broke at retirement. The most obvious start is to have some sort of savings for your retirement. Wherever you turn there are banks and investment houses marketing retirement savings products. Some say that they are safe and low risk or even have a guarantee. When deciding where to save for your retirement be careful not to be caught up in fantastic marketing and land up with a product that is not suited to you and your lifestyle. No product out there is risk free so the first thing to remember is not to place all your savings in one product or even in one investment house or bank. A finance house going insolvent can easily lead to millions of people finding themselves broke at retirement.
Do your research and watch the fine print. Retirement funds have restrictions on them. One major limitation is that you may only be able to access your money upon retirement, medical retirement or emigration. You will be sold on the idea of tax reimbursements for saving in a retirement fund but remember that there is very little flexibility with retirement funds. One good argument is that because the money is inaccessible it prevents you drawing on it before retirement. Retirement annuities cannot be ceded nor used as collateral keeping your funds “safe” for retirement. All retirement funds must be watched. Know where your money is being invested. Many people have become broke at retirement because they were promised that a fund would perform and it did not.
One major expense during retirement is medical expense. This expense can well cause you to become broke at retirement. It is easy to under estimate medical costs. Some people think that they will be able to rely on state medical care. This is a very big mistake. To avoid becoming broke at retirement you should be on a hospital insurance scheme. Medical care is becoming more costly and governments are finding it more difficult to provide medical care.
Housing during retirement is a topic we will discuss in another article. Being homeless and broke at retirement is devistating. There is a lot to consider when planning where to live when you retire and the costs involved. Many people avoid planning for retirement. They find it a boring topic and often feel they have enough cash to deal with anything that will come their way. Accommodation is one area that is not that easy to just change at any point. It is simple to say you will just sell your big property and down scale when you retire but some properties do not sell that easily. It is also a common idea that people have that they can alter the house to suite them when they retire. This is a lovely idea but often when they come to making the alterations they realize that they cannot afford them.
There is so much more to look at to avoid being broke at retirement. As we cover more topics you will see that if you find planning for retirement a waste of time and dull you may find it difficult to do it all at once when you retire. This is not financial advice and when planning for your retirement you should seek a professional opinion.
Reference for: Broke At Retirement